DirecTV Tops Profit Estimates on Latin America Gains

May 6 (Bloomberg) -- DirecTV beat analysts’ first-quarter
profit estimates on higher bills for U.S. customers and more
subscriber sign-ups than expected in Latin America.

Earnings of $1.63 a share, excluding one-time items, topped
analysts’ estimates for $1.48 a share on average. DirecTV added
361,000 Latin American customers and 12,000 U.S. subscribers,
the El Segundo, California-based company said today in a
statement. Analysts had estimated 227,000 for Latin America and
13,000 in the U.S., according to a Bloomberg survey.

As the pool of U.S. pay-TV customers peaks with viewers
spending more time and money watching video online, DirecTV has
focused on boosting revenue from each subscriber with price
increases and fees for more advanced receivers. The fact that
most Americans already pay for TV is driving a wave of industry
consolidation, with Comcast Corp. buying Time Warner Cable Inc.
and DirecTV reportedly drawing the interest of AT&T Inc.

“Fundamentally, this is about how much DirecTV is worth in
a sale, and how strong their bargaining position is with AT&T
and Dish,” said Tim Farrar, an analyst and founder of Telecom,
Media & Finance Associates Inc., a Menlo Park, California-based
research firm.

When Bloomberg News reported in March that Dish Network
Corp. Chairman Charlie Ergen had approached DirecTV about a
merger, some analysts said that AT&T would be a better suitor
for his satellite-TV business and wireless spectrum. The Wall
Street Journal reported last week that AT&T is instead
considering a bid for DirecTV, and that’s raising questions
about which combination makes the most sense and stands the best
chance of getting past regulators.

Consolidation Wave

It’s a wave of consolidation that could sweep up -- or
isolate -- DirecTV.

The backdrop is that the number of potential pay-TV
customers is peaking as viewers increasingly watch video online
with services like Netflix Inc. and Hulu LLC, making fast
broadband connections a key offering.

The largest U.S. satellite-TV provider’s first-quarter
revenue rose 3.6 percent to $7.86 billion. Analysts projected
sales of $7.92 billion on average, according to data compiled by
Bloomberg.

In the U.S., a customer’s average monthly bill rose 4.3
percent to $100.16. Subscribers in the U.S. reached 20.3
million. Latin American customers came to 18.1 million when
including Sky Mexico, of which DirecTV owns 41 percent.

Shares of DirecTV rose 2.4 percent to $81.74 at the close
in New York. The stock is up 18 percent this year.

DirecTV reported net income of $561 million, or $1.09 a
share, down from $690 million, or $1.20 a share, a year earlier.
Net income was reduced by a $281 million charge in the quarter
because of currency devaluation in Venezuela.

Satellite-TV rival Dish is scheduled to report earnings
before U.S. markets open on May 8.